own a stock portfolio invested 25% in Stock Q, 20% in Stock R, 15% in Stock S
and 40% in Stock T. The betas for these four stocks are .84, 1.17, 1.11, and 1.36
respectively. What is the portfolio beta?
a) 1.15
b) 1.25
c) 1.38
d) 1.42
24. Christopher Corporation has just paid a dividend of $1.45 per share on its common
stock. The annual dividend is expected to increase by 2%, 3%, and 4%,
respectively, over the next three years, and then by 5% per year thereafter. If the
opportunity cost of capital is 10%, what is the current stock price?
a) $24.72
b) $16.01
c) $26.55
d) $28.79
25. Clouston Chicken Burgers is a mature manufacturing firm. The company just paid a
$4.00 annual dividend, but management expects to reduce the payout by 4% per year,
indefinitely. If you require a 12% return on this stock, what will you pay for a share
today?
a) $24.00
b) $25.24
c) $28.56
d) $30.00
26. Jackson Investments Incorporated (JII) stock currently sells for $50 per share. The
market requires a 13% return on the firm's stock. If the company maintains a constant
5.5% growth rate in dividends, what was the most recent annual dividend per share
paid on the stock?
a) $3.43
b) $3.62
c) $3.75
d) $3.55
